Friday, December 23, 2011

Indian Rupee to remain range bound today

The USDINR remained range bound yesterday
with lack of major trigger. The USDINR for December expiry closed the session
at 52.74 after moving in a range of 52.99 to 52.65. In the domestic bond
market, government bond yields fell after data showed food inflation eased to
its slowest pace in nearly four years.Government
data showed the wholesale price index-based food inflation rate in the week
ended Dec. 10 fell to 1.81% from a year earlier, compared with 4.35% in the
preceding week, as vegetable prices cooled.Easing
food inflation and slowing economic growth have raised hopes of an imminent
reversal in the central bank's prolonged monetary tightening stance and has
fuelled a rally in bond prices.

In the global markets, the Euro held near
$1.30 against the greenback as key US stock gauges gained, signaling that
traders and investors are focusing on the positive economic data. The US dollar
initially stepped up against the major currencies after a report showed
unemployment claims unexpectedly fell in the latest week, eclipsing other
important data on US GDP. A Commerce Department report that third quarter
growth in GDP was revised down to 1.8% drove the dollar higher initially, however, strong gains in the US
stocks markets in the latter half stabilized the pair.

The Indian Rupee is expected to see
modestly positive opening before the weekend as better than expected economic
readings in the US is expected to push regional equities. Yesterday, the Dow
Jones Industrial Average rose 0.5 percent while the broader S&P 500 index
gained 0.8 percent.

We expect, the USDINR may trade stable due
to holiday mood in the global market. EURINR and GBPINR may see some moderate
correction.

Today’s data to watch

Event

GMT

EST5EDT

Consensus

Previous

EUR French
Gross Domestic Product (QoQ)

06:30

01:30

0.40%

0.40%

EUR French
Producer Prices (YoY)

07:45

02:45

5.20%

5.80%

GBP Index of
Services (MoM)

09:30

04:30

-0.10%

0.10%

EUR Italian
Consumer Confidence Index s.a.

10:00

05:00

95.50

96.50

USD Durable
Goods Orders

13:30

08:30

2.00%

-0.50%

USD Durables Ex
Transportation

13:30

08:30

0.40%

1.10%

USD Personal
Income

13:30

08:30

0.40%

0.40%

USD Personal
Spending

13:30

08:30

0.30%

0.10%

USD Personal
Consumption Expenditure Deflator (YoY)

13:30

08:30

2.70%

2.70%

USD Personal
Consumption Expenditure Core (MoM)

13:30

08:30

0.10%

0.10%

USD Personal
Consumption Expenditure Core (YoY)

13:30

08:30

1.70%

1.70%

USD New Home
Sales (MoM)

15:00

10:00

2.60%

1.30%

USD New Home
Sales

15:00

10:00

315K

307K

Outlook
and Strategy

USDINR Dec: The resistance is seen at 53.00
levels and if the market breaches the same then we can see a recovery towards
53.20 levels. The support is seen at 52.65 and then 52.51 levels. If the market
breaks the support of 52.65 then it may see a healthy correction.

EURINR Dec: Trend is expected sideways for
the session. The support is seen at 68.75 and resistance is seen at 69.17 and
then 69.32 levels. One can look for selling on a pullback below the first
resistance by keeping stoploss above 69.32 levels

JPYINR Dec:
The market has resistance at 67.69 and then 67.85 levels. The support is
seen at 67.40 and then 67.15 levels. If market holds the support of 67.40, then
we may see a recovery towards 67.80 levels.